What is SCM?

Supply Chain Management manages the flow of goods and services and includes all processes that transform raw material into a final product. However, this management only takes care of supply going in and out of the warehouse. So how do SCM works then? Well, SCM works by attempting to centralize the management system for logistics to enter and exit the warehouse, so the warehouse crew does not need to check and count every item on every aisle of the warehouse; they can check it on the central terminal to check the item’s stock.

The Supply chain is the connected network of individuals, organizations, resources, activities, and technologies involved in manufacturing and selling a product or service. A supply chain is like a railroad connecting individuals, organizations, resources, activities, and technologies to another individual. From this information, we know that SCM can only be used if the organization has a supply chain. An organization uses SCM to help the organization manage the supply they got from the supplier. Suppose the customer also implements an ERP system. In that case, the organization can see the SCM they have through the ERP system to make it easier to control what they have in the warehouse or monitor items entering and exiting the warehouse.

SCM concept has two core ideas:

• The product that reaches an end-user represents the cumulative effort of multiple organization
• The supply chain has existed for a long time, but most organizations only pay attention to what happens within their “four walls.” Few businesses understood this and much less managed, so the entire activity of the supply chain is ineffective.

So based on this concept, SCM is an activity that combines some organization to help an organization give a product to the end-user and to pay more attention to what happens outside the “four walls.” Nowadays, SCM and the cloud are naturally an ally because part of the cloud-based application is more flexible in adapting to change than the application that does not use the advantage of a cloud-based system. By using cloud-based applications, SCM users can adapt to the change in the industry and make them more adaptive to Industry 4.0, where everything is going on the internet. Using the cloud-based application for SCM is also helping the organization when they want to implement ERP in their business line because by using the cloud-based application, the organization does not need to take the full-scale migration. After all, the cloud-based system has what they called API. By using this API thingy, the SCM application, an ERP application, although the organization uses two different applications, the information about SCM can be seen in the ERP application.

References:

• https://www.investopedia.com/terms/s/scm.asp – https://scm.ncsu.edu/scm-articles/article/what-is-supply-chain-management-scm
• https://www.oracle.com/scm/what-is-supply-chain-management/